Diverging Trends in National and Local Concentration

Esteban Rossi-Hansberg, Pierre-Daniel Sarte, Nicholas Trachter

Chapter in NBER book NBER Macroeconomics Annual 2020, volume 35 (2020), Martin Eichenbaum and Erik Hurst, editors (p. 115 - 150)
Conference held April 2-3, 2020
Published in May 2021 by University of Chicago Press
in Macroeconomics Annual Book Series

Using U.S. NETS data, we present evidence that the positive trend observed in national product-market concentration between 1990 and 2014 becomes a negative trend when we focus on measures of local concentration. We document diverging trends for several geographic definitions of local markets. SIC 8 industries with diverging trends are pervasive across sectors. In these industries, top firms have contributed to the amplification of both trends. When a top firm opens a plant, local concentration declines and remains lower for at least 7 years. Our findings, therefore, reconcile the increasing national role of large firms with falling local concentration, and a likely more competitive local environment.

Supplementary materials for this chapter:

• Appendix
• Replication Files

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